Start investing? 5 obstacles + 5 investment tips for beginners
It is more than normal that you are in doubt when considering to start investing. After all, it can be quite exciting to bring some of your savings to the stock market. But investing does not have to be such a ‘big deal’ as many people think. In this article we discuss 5 common obstacles and give tips that can help dispel your doubts.
Obstacle 1: I don’t know enough to start investing
There was a time when investing was mainly for screaming traders on the trading floor. You had to be an expert to know all the ins and outs and know what to invest in. The idea that investing is only suitable for people who know everything about it comes partly from here.
But when you have your money invested by an expert, you don’t need to have this knowledge yourself. On the contrary, you benefit from the knowledge and experience of a professional asset manager.
Tip 1: Get to know the basics of investing
When you first start investing, it is good to familiarize yourself with some basic concepts and to be well aware of the risks and costs. When you open an investment account, for example, you will be asked about your knowledge and experience with investing. In this way, it will be determined, among other things, which risk level suits you.
Obstacle 2: I don’t have enough money to start investing
Investing is no longer just a rich man’s hobby. With the advent of online investment accounts, the stock market has become accessible to everyone. And because of the relatively low costs of online investing, in principle you can invest from any amount.
Tip 2: Start with a small amount
Many people who start investing like to do so with a small amount of money. This way you can get to know them relatively unconcerned and see if investing is something for you. Even if you already have a lot of savings, it is not at all necessary (and not desirable) to invest all this. Just start with an amount you feel comfortable with and slowly build it up.
Anyway, it is important that you never invest more money than you can miss in any scenario. It is not wise to invest with money that you need (or may have) in the short term. Always keep a financial buffer behind you in order to be able to absorb unforeseen expenses.
Obstacle 3: I don’t have time to invest
A common misunderstanding about investing is that it takes an awful lot of time to keep up with the stock market. Okay, if you want to become a day trader, you have to keep a constant eye on the stock market. But if you have your money invested by an expert, it won’t take you any time at all.
Tip 3: Have your money invested by an expert
Of course there are people who like to invest themselves and enjoy following the stock exchange. Do you prefer to spend your time on other things? Then consider having your money invested by an asset manager. You will then pay a management fee, but you will also benefit from the knowledge and experience of an expert in the field of investing.
Obstacle 4: I am afraid of losing my money
This is a real fear. Investing is simply more risky than saving and if the worst comes to the worst, you may lose (part of) your deposit. When you invest, you will always have to accept a certain degree of risk. The following applies: with a higher risk profile, the expected return is higher.
Tip 4: Know the risks and invest only with money you can spare
It can help to familiarize yourself with the most important investment risks. This will give you a better idea of what can go wrong and you can better determine how much risk you are willing to take. It is also important to know that you can do a lot to limit certain risks.
Obstacle 5: I don’t know when to get in
Entering low and selling high – it’s a common goal among novice investors. However, the problem is that the stock market is difficult to predict, even by professional investors. There’s not much point in waiting for the right time to enter.
Tip 5: Spread your investment by investing periodically
The period you invest is more important than the entry moment. In general, your return will be higher the longer your money is invested. That is why it is best to see investing as something for the long term. Avoid as much as possible stepping out and getting back in during this period.
You can also choose to invest periodically. In that case, for example, you commit a fixed amount each month. This allows you to spread your investment over a longer period of time, allowing you to take advantage of any price falls.